[watwut]

My understanding is that bad news did not bubbled up. They stayed hidden and that one is cultural problem.Instead of president being informed that project will be late, programmers were informed that failure is not an option. Turned out it was an option.

Cultural problems like this are often caused by leadership. Whether you will be told bad news depends a lot on your management style and on people you decide to work with. You do not have to micromanage, but if they are scared to tell you the truth, then it is often your own fault.